A fairer (small) business environment [Commentary]

Small businesses are politically overmatched against multinational corporate giants

July 22, 2014|Thomas F. Schaller

Is there a way to actually unite economic populists on the liberal left and libertarian right? Maybe not. But one promising possibility is the prioritization of American small businesses over powerful, multinational corporate dominance.

The events of September 29, 2008, certainly provided a brief glimmer of hope that a hybrid ideological alliance might push back against big business. That day, the U.S. House of Representatives stunned Washington and Wall Street by rejecting the Bush Administration's $700 billion bank bailout, 228 to 205. The Dow Jones Industrial index fell 778 points in a single afternoon, a 7 percent drop.

Sixty-five Democrats joined 133 Republicans to rebuke Democratic House Speaker Nancy Pelosi and Republican President George W. Bush. Leading House conservatives including Michele Bachmann, Jeb Hensarling and Kevin McCarthy voted with liberal stalwarts Dennis Kucinich, Sheila Jackson Lee and Maryland's own Elijah Cummings to defeat the measure. (Good luck finding another major piece of legislation with these same six House members voting together.)

The House quickly reversed itself, the Senate jumped aboard the bailout, and President Bush signed the bill into law. The brief moment of bipartisan economic populism vanished. But surely a sizable number of political elites across the ideological spectrum harbor a latent desire to create a fairer business environment — for consumers, sure, but also for small businesses.

And I know it's possible because even Andrew Langer and I agree.

Mr. Langer is a small-business advocate, president of the Institute for Liberty, and author of the forthcoming book, "The War on Small Business." Some readers will recognize the former chief regulatory lobbyist for the National Federation of Independent Business — the nation's leading small business trade group — from his frequent spells guest hosting on WBAL radio.

Mr. Langer and I would likely oppose each other on nine votes of every 10 cast by Congress. But after inviting him to guest lecture to my interest group class last spring, I realized how much our views about business regulation overlap.

I was trying to teach my students political economy concepts like capture theory, market failure and comparative advantage. I wanted to impress upon them that, despite superficial calls for free markets and less regulation, large corporations often want governments to meddle in markets, even if doing so leads to more stringent and complicated regulatory rules.

"Since my days as a small-business lobbyist, I've always been deeply concerned about the power large businesses hold over the regulatory process," he told me. "Because they're able to absorb regulatory costs much more easily, and because, per employee, regulatory costs are lower, they can use the power of regulation as a predatory tool in the marketplace, forcing greater costs on small firms and driving them out of the marketplace."

The federal government hardly ignores small business. The Small Business Administration provides loans and advice that help new small businesses form and survive in the early stages when they are most likely to fail. In the form of the NFIB and people like Mr. Langer, small businesses have their own allies working to protect and promote their interests. And I'm sure the politicians from both parties who tout the fact that small businesses create the majority of new jobs really do want small-business people to succeed.

But unfortunately, small businesses are politically overmatched against multinational corporate giants.

After all, the Democrats' strong union ties tend to complicate their relationship with business generally, even if the party is increasingly dependent upon corporate campaign donations. And if the Democrats might be described as a partially-owned subsidiary of corporate America, consider the Republicans a wholly-owned franchise.

The irony is that liberals cast themselves as defenders of the little guy and conservatives boast that they promote free and fair markets, and yet it is small business America — arguably the best example of the intersection of these two ideals — that often gets shunted aside in favor of politically-rigged markets that favor powerful corporations.

Something needs to change. If even Mr. Langer and I can agree, surely a majority of members of Congress can, too.

Thomas F. Schaller teaches political science at UMBC. His column appears every other Wednesday. His email is schaller67@gmail.com. Twitter: @schaller67.